NIGHT OWL
The Scottish philosopher Adam Smith believed in the idea that man should be given the liberty to pursue his own interest so long that he does not violate the laws of justice; as it is in the pursuit of enlightened self-interest that he can contribute to the good of society.
The free-market economy has allowed societies to flourish, providing the needed services of the people, while also producing jobs, unlocking new markets, unfolding opportunities, and greatly contributing to a state’s progress. However, certain forms of capitalism have also caused economic disparity between the very wealthy and the rest of the population.
In the pursuit of inclusive and equitable economic growth, the idea of inclusive capitalism has emerged. It calls for companies, corporations, the business sector, to go beyond profit, to pursue the greater cause of contributing to a sustainable, equitable society.
Companies, investors, corporations must profit, but the idea of inclusive capitalism is to do so while addressing the needs of society. It’s profiting minus the greed. It’s ensuring that the wealth the company produces benefits not only the employers but also the employees, not only the shareholders, but also the stakeholders.
Making the economy better for everyone
The World Economic Forum (WEF) calls it stakeholder capitalism, wherein a company must serve not only its shareholders, but also its employees, customers, suppliers, the communities where it exists, and society as a whole—meaning, all its stakeholders.
In 2020, WEF released the Davos Manifesto, a set of ethical principles to guide companies in the Fourth Industrial Revolution. It states that a company must support fair competition and a level playing field. It must have zero tolerance for corruption, treat its people with dignity and respect, and uphold human rights in the entire supply chain. It should pay its fair share of taxes and serve the society at large through its activities. A company’s performance must be measured not only on the return to shareholders, but also on attaining its environmental, social, and good governance objectives.
Inclusive capitalism is more than just corporate social responsibility (CSR), although this is not to discredit the impact of CSR to many individuals and communities. But businesses, in order to be inclusive, must not only give back to the community, but also work with the community. We have to see it as a mutually beneficial partnership—a business thrives through the support of its customers and the community that it operates in. In return, a business must consider how its operations affect the community, including the environment.
Another important aspect of this capitalism is the participation of employees beyond the work stated on their contracts. Aside from providing fair pay and benefits, building an inclusive business means allowing employees to be part of decision-making. When employees feel that their opinions matter, and that they see their recommendations being considered, they feel that they have a stake in the company. This develops into a deeper sense of commitment to ensure the company’s progress and the achievement of its vision.
Embracing diversity
Embracing diversity is an integral part of inclusive capitalism. It does not mean merely employing more women, people of color, persons with disabilities, or members of the LGBTQIA+ community. Simply put, it is seeing past the physical, and focusing more on the talent and skills that a person has to offer.
In its 2018 report, “Delivering through diversity,” McKinsey & Company found that diverse companies perform better. Organizations in the top quartile with gender-diverse executive teams were 21 percent more likely to experience above-average profitability than companies in the fourth quartile. Meanwhile, organizations with ethnic and culturally diverse leadership are 33 percent more likely to outperform their peers.
Diversity allows for higher performance and profits of companies because it increases a company’s productivity and creativity.
Essentially, in pursuing inclusive capitalism, we are making choices that will make the economy better for everyone, we are allowing everybody to participate, we are encouraging success of every individual, and in doing so, each and every one can contribute to the good of society.